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The COVID-19 pandemic caused unprecedented social, financial and economic turmoil worldwide. One welcome side-effect though has been the increasing shift towards the use of digital technologies in international arbitration which have greatly reduced its carbon footprint. However, the increased use of technology in turn leads to a significant increase of cyber security risks and data protection issues. All arbitration participants – be it clients, arbitrators or law firms acting as legal counsel – need to have a clear approach to mitigate these ever-increasing risks with a view to safeguarding proceedings.
From an international arbitration perspective, the COVID-19 pandemic raised a number of challenges but also offered significant opportunities to increase efficiency. Travel restrictions and being forced to work from home made arbitration participants and arbitral institutions re-think the conduct of arbitrations. There was an immediate and noticeable shift towards optimizing the use of technology in the conduct of proceedings, such as the increased use of online case management platforms, online file sharing services and electronic hearing bundles, as well as conducting meetings, interviews and hearings virtually. Many of the leading arbitral institutions have reflected these developments in updates to their rules and practices.
As well as facilitating the conduct of arbitration in a COVID 19 world, these changes massively reduce the carbon footprint of international arbitration proceedings in comparison to a pre-COVID 19 world. A case study conducted by the Steering Committee of the Campaign For Greener Arbitrations showed that the total carbon impact in kg CO2e of a medium-sized (valued at US$30-50 million) international arbitration was 418,531.02. This would require the planting of more than 20,000 trees to offset the emissions of a single arbitration conducted without the digital technology tools.
But this significant benefit in terms of reducing carbon footprint brings with it increased risks. The greater dependence on technology in international arbitration, working from home and the use of private equipment and networks exposes participants to increased cyber security and data protection risks (read more here and here). Any cyber hack can seriously affect the integrity and confidentiality of the proceedings. Any leakage of data may also violate applicable data protection laws and create exposure to other liabilities.
Of course, such risks have been prevalent for some time, not least where disputes are high value or involve business-sensitive information. Parties, arbitrators, institutions, experts and related service providers therefore have to adopt appropriate cyber security and data protection measures to safeguard the arbitration proceedings in which they are involved.
Core steps to mitigate these risks can include:
With robust cyber security and data protection measures in place, the international arbitration community can maximize the benefits of technology and ensure that the environmental benefits that have been realised over the last two years are sustained in a post-COVID 19 world. This goal goes hand in hand with our sector leading carbon reduction targets as a globally operating law firm and our climate protection ambitions.
Moving forwards, whenever appropriate we will be engaging co-counsel, arbitrators and other relevant parties in discussions about these risks and appropriate protective measures at the start of new arbitrations.